World leaders, representatives of international development and humanitarian organizations, and UN delegations gathered in Geneva on Monday to rally financial support for Pakistan’s recovery from the devastating floods that hammered the country last year.
Pakistan has appealed for $16.3 billion to assist it to rebuild the country, and almost half this amount had been pledged by countries attending the International Conference on Climate Resilient Pakistan by Monday evening.
The United States committed an additional $100 million in recovery funding for flood-hit areas, while the European Union raised its total contribution to Pakistan to $500 million. The Islamic Development Bank’s pledge of $4.2 billion is the largest single donation to date.
At their height, the historic floodwaters submerged over a third of Pakistan, directly affecting over 33 million people and pushing nine million to the brink of poverty. Over 1,700 people, a third of whom were children, lost their lives to the torrential rains. More than two million homes were severely damaged or destroyed, along with 8,000 kilometres of roads and 3,100 kilometres of railway tracks.
Of the eight million people displaced in early October 2022 by the floods that Pakistani Prime Minister Shehbaz Sharif described as a “tsunami from the sky”, 5.4 million remain displaced. The UN says money raised for flood victims is set to run out this month without fresh commitments, leaving millions at risk of disease, illness and malnutrition.
With millions still living near contaminated floodwaters, over 1,000 confirmed cholera cases and 76,000 dengue cases were recorded in 2022. Diarrhoea remains widespread and malnutrition in children continues to increase.
“No country deserves to endure what happened to Pakistan,” UN Secretary-General Antonio Guterres told reporters at a news conference with Sharif on the sidelines of the meeting. “If there is any doubt about loss and damage — go to Pakistan. There is loss. There is damage. The devastation of climate change is real.”
The funding push comes as Pakistan finds itself running out of avenues to turn to for the credit it needs to rebuild the country. Prior to the floods, Pakistan’s economy was already teetering on the brink of collapse, with dwindling foreign exchange reserves and debt default looming large over the country’s balance sheets.
With over 60% of developing nations in “critical” debt, according to the IMF, the conference is shaping up to be a litmus test for how rich countries will respond to the financial needs of the developing world as the impacts of climate change worsen.
Though a historic loss-and-damage fund was agreed to at COP27 in Egypt, it is not yet operational. Strong language on the reform of multilateral development banks was also included in the deal, but no changes have taken place to date.
Pakistan, which is one of the top 10 most affected countries by climate change, plays a negligible role in global warming, emitting less than 1% of global carbon dioxide annually. In the months prior to the floods, Pakistan was caught in a scorching heat wave that caused forest fires and aggravated droughts in the country’s western provinces. Some of the same areas on fire in the early spring were underwater by summer.
“Pakistan is doubly victimised by climate chaos and a morally bankrupt global financial system,” Guterres said. “That system routinely denies middle-income countries the debt relief and concessional funding needed to invest in resilience against natural disasters.”
In August, as the floods were in full swing, the Pakistani government agreed to new terms with the IMF on its foreign debt repayment. The $1.17 billion loan saved Pakistan from default – an outcome that would have made future borrowing more difficult, and likely sparked a recession – but forced the country to accept harsh austerity policies, passing the burden of debt on to ordinary Pakistanis.
Amid overlapping food and energy crises arising from the Russian invasion of Ukraine and the destruction of Pakistan’s arable land in the floods, Prime Minister Sharif called the requirements imposed by the IMF to pass additional burdens on already struggling people “not in line with the norms of justice.”
“How could you expect that, after the floods hit Pakistan and almost destroyed everything, we will pass on this imported inflation to the common man and he or she will accept it,” Sharif said.
“The rich can enjoy both worlds whether the price of oil touches $200 or $30 a barrel. And you expect a poor man who is able to meet these two ends with great difficulty will absorb this price hike without any protest? That is not normal.”
While Pakistan’s situation is particularly acute, its overlapping crises are set to become a common occurrence in poor countries in the path of climate change. Multilateral development banks, Guterres said, need to make available concessional funding and rework their business models to allow countries to deal with extreme weather events without suffering from crippling debt loads.
“We need first of all to recognize that we presently have a situation in the developing world in which countries are strangled by debt,” Guterres said. “We need to redesign our financial system in order to be able to take into account vulnerability and not only GDP when decisions are made about concessional funding to countries around the world.”
Citing a recent discussion with Kenyan President William Ruto, Guterres noted that his home country of Portugal – whose debt is 117.7% of GDP – is easily able to access loans at interest rates of 4%, while the lowest offer presented to Kenya was 14%.
“It is very clear that the present system is biased. The system was conceived by a group of rich countries and naturally benefits rich countries,” he said. “It shows that there is a basic injustice in the system and that we need effective reform.”
Despite the painful conditions associated with the IMF loan, Sharif emphasized that Pakistan’s government “will do everything to comply with the terms and conditions” of the programme. Dialogues appealing to the IMF for “compassion” and “breathing space” are ongoing, he said.
“I hope that member states that control the mores and these institutions will be able to implement the kind of reforms that are needed to establish more justice,” Guterres concluded.
Source: Health Policy Watch